1. Goods were in transit from a vendor to ABCD on December 31, 2013.

The invoice price was P100,000, and the goods were shipped
FOB shipping point on December 29, 2013. The goods were received on January 4, 2014. Since the goods were not received as at
the end of 2013, inventory should not be included but ABCD is liable to the vendor because the goods were shipped FOB shipping
point. (TRUE or FALSE) FALSE
2. Goods shipped to XYZ FOB shipping point on December 20, 2013, from a vendor were lost in transit. The invoice price was P50,000.
On January 5, 2014, XYZ filed a P50,000 claim against the common carrier. XYZ is still liable to vendor amounting to P50,000. (TRUE
or FALSE) TRUE
3. Goods shipped f.o.b. destination on December 21, 2011 from a vendor to Cristobal were received on January 6, 2012. The invoice
cost was P25,000. The purchasing company is not liable to the seller because title of the goods is not yet transferred to the former.
(TRUE or FALSE) TRUE
4. On August 1, JKL Company recorded purchases of inventory of P80,000 and P100,000 under credit terms of 2/15, net 30. The
payment due on the P80,000 purchase was remitted on August 14. The payment due on the P100,000 purchase was remitted on
August 29. Under the net method and the gross method, these purchases should be included at what respective net amounts in
the determination of cost of goods available for sale?
 Net Method 176,400
 Gross Method 178,400
5. QRST Co. records purchases at net amounts. On May 5 QRST purchased merchandise on account, P32,000, terms 2/10, n/30. QRST
returned P2,000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. The amount to
be recorded as a purchase return is 1,960
6. Torres Retailers purchased merchandise with a list price of P90,000, subject to trade discounts of 20% and 10%, with no cash
discounts allowable. Torres should record the cost of this merchandise as 64,800
7. On June 1, 2013, HIJK Corp. sold merchandise with a list price of P30,000 to Linn on account. HIJK allowed trade discounts of 30%
and 20%. Credit terms were 2/15, n/40 and the sale was made f.o.b. shipping point. HIJK prepaid P600 of delivery costs for Linn as
an accommodation. On June 12, 2011, HIJK received from Linn a remittance in full payment amounting to 17,064
8. TVs shipped to a customer January 2, 2014, costing P5,000 were included in inventory at December 31, 2013. The sale was recorded
in 2013. Determine the account that is overstated. Sales
9. TVs costing P10,000 received December 30, 2013, were recorded as paid on January 2, 2014. Physical count of inventory was made
on December 31, 2013. Determine the impact to profit or loss due to mistake committed assuming the company uses the periodic
method of recording. Understated 10,000
10. The following information applied to LMN, Inc. for 2013: Merchandise purchased for resale, P400,000; Freight-in, 16,000; Freight-
out, 10,000; Purchase returns, 4,000. LMN's 2013 inventoriable cost was
(For items 11 and 12) The following data pertain to the current year of Leakage Company:
Inventory – January 1:
Cost 5,000,000
Net realizable value 4,500,000
Net purchases 20,000,000
Inventory – December 31:
Cost 6,000,000
Net realizable value 5,300,000
11. What is the allowance for inventory write down at the end of the year? 700,000
12. Compute the cost of sales. 19.2M
(For items 12 – 15) The company is committed to purchase agricultural products at a contract purchase price of P500,000. The
replacement cost at year end is P450,000.
13. Prepare the entry to record the purchase commitment. No entry
14. Prepare the entry at the end of the year. Dr. Loss on PC Cr. Estimated liability
15. if the replacement cost of the purchase commitment is P600,000 when the actual purchase was made, prepare the entry to record
the purchase. Purchases 500,000 Liability 50,000 Cash 500,000 Gain 50,000
16. if the replacement cost of the purchase commitment is P420,000 when the actual purchase was made, prepare the entry to record
the purchase. Purchases 420,000 Estimated liability 50,000 Loss 30,000 Cash 500,000